Federal loan to shield Nova Scotia Power customers from 19 per cent rate hike

HALIFAX -

The Canadian government have offered a $500 million loan to Nova Scotia Power and the provincial government that will not only help green the power grid and meet greenhouse gas targets, but also avoid the impact of a 19 per cent rate hike for Nova Scotia Power customers next year.

Canada’s Minister of Energy and Natural Resources Jonathan Wilkinson was in Halifax Monday to make the announcement and said the $500 million loan addresses an energy shortfall due to significant and unexpected delays in receiving hydro electricity power from Newfoundland and Labrador’s Muskrat Falls power station to the Maritime Link.

“Stacking that kind of additional cost on top is not feasible at a time when cost of living pressures are already significant,” said Wilkinson. “This loan guarantee will protect all Nova Scotians. As folks will know here, Nova Scotians pay higher energy bills than many provinces in the country."

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Wilkinson confirmed the Maritime Link, which brings this hydropower to Nova Scotia, was built on time and on budget. However, delays in the Newfoundland and Labrador portion at Muskrat Falls have faced delays.

The delays in delivering clean energy has forced Nova Scotia Power to purchase replacement fuel to generate enough power to meet the energy shortfall, but comes at a time when the costs of fuel have spiked around the globe.

Nova Scotia Power president and CEO Peter Gregg says the utility company has been accumulating those high fuel costs and have limited ability to absorb and carry those costs forward.

Nova Scotia Power says a $500 million federal loan will help pay down fuel costs and keep power rates in check while hydro electricity infrastructure is completed.

The negotiated loan is a way to cover those costs and not pass the burden down to the customer, said Gregg.

“We knew that a big increase like we talked about before would not be palatable for our customers,” said Gregg.

Gregg said Nova Scotia Power sat down with both the provincial and federal governments and came up with this loan package, but there are still regulatory hurdles to jump.

“I think it’s a necessary solution and I think we’ve done the right thing for our customers,” said Gregg.

Gregg couldn’t say how long the loan will go towards keeping power rates in check, as he and government confirmed, the loan details are still being sorted out and require approval from the provincial regulator.

“We have to negotiate that loan guarantee,” said Gregg. “We would then have to go to the UARB (Utility and Review Board) for a process that would look to address things like total amount, how long should this be recovered over and what would be the annual rate impact, those things still need to be addressed.”

Gregg suggested power rates would be kept close to the rate of inflation but said a clearer picture will emerge once the regulatory process is complete.

For more Nova Scotia news, visit our dedicated provincial page.